Unwired Planet is “massive time and money saver”, say telecoms and car companies

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05 November 2018
|

Patrick Wingrove, London

Large telecoms companies say the UK Court of Appeal’s decision that global licences for SEPs can be FRAND streamlines licensing while automotive firms believe it helps benchmark component prices. But more still needs to be clarified

Large telecommunications and
automotive companies have told Managing IP that they are
pleased by the
recent Unwired Planet v Huawei judgement
because it will streamline licensing and give price certainty
in negotiating licences for standard essential patents
(SEPs).

In-house sources in telecoms companies argue that while it
has not solved every problem around licensing SEPs by fair,
reasonable and non-discriminatory (FRAND) terms, the UK Court
of Appeal’s decision that global licences are
FRAND will help stifle licensee delay tactics.

"The decision is a practical solution rather than a legal
one and will be a massive time and money saver that will make
life so much easier," says the head of IP at a Germany-based
telecoms company.

An end to "stalling tactics"?

The head of litigation at a European telecoms company adds:
"We have seen too many stalling tactics by the potential
licensees and it was good that the court put down a price stamp
and said if that is not accepted then the company would be
faced with an injunction."

"The decision is a practical solution rather than a
legal one and will be a massive time and money saver
that will make life so much easier"

He adds that his firm has many SEPs that are used by
numerous companies and this judgment puts another weapon in
their arsenal to give them the best chance of getting a licence
sorted quickly and securing royalties.

"We think about approaches such as dragging infringers into
global FRAND arbitration or suing them in Germany where we can
get injunctions in the hopes that that brings them to the
table," he says. "This UK ruling gives us another good
option."

Sources from automotive companies say the decision has
helped give them price certainty in the market by setting a
benchmark on how much communications components should costs.
The chief licensing officer at a Germany-based car manufacturer
points out that however the Court of Appeal’s
decision is interpreted, a similar figure is reached.

"We still do not know what the stack will cost in the end
for a car or for the communications components, but this
provides a good benchmark from where you can start and we have
good arguments that it can never be higher," he says.

He adds that if you take the Avanci proposal,
the Unwired Planet judgment and Judge
Selna’s FRAND
decision from the US courts – which value
communications components at below of equal to $15, $20 and $18
respectively – you see a picture developing.

"Whether it ends up being $12 or $18 can now be decided by
an arbitration panel or court," he says.

These reactions come after the Court of Appeal ruled that
FRAND obligations can be met if an SEP owner offers a worldwide
licence, and that an implementer that refuses to take such a
licence could be subject to an injunction to prevent further
patent infringement.

"This UK ruling gives us another good option"

The judgment also confirmed that a UK judge can set a global
FRAND rate when two parties cannot agree on one and set a clear
methodology for establishing such a rate.

Lord Kitchin said it would be "wholly impractical" and not
fair or reasonable for SEP owners to have to negotiate patent
licences country by country, confirming Mr Justice
Birss’s opinion that such an expectation would be
"madness".

Huawei has requested to appeal the decision to the Supreme
Court, which will likely accept, but telecoms sources are
confident that the same outcome will be reached. The head of IP
adds that his company is looking forward to seeing whether the
ruling will gain international acceptance.

Further to go

The head of IP adds that there are finer details from this
judgment that may need to be discussed and resolved, such as
different scopes of protection in different countries.

"How is that factored into the international arrangement?"
he asks. The UK, for example, may have a narrower scope of
protection than other jurisdictions, and it is uncertain
whether its courts might calculate that fact into licence
fees.

He adds that an argument could be made for national licences
from other types of business that do not have a global reach
and their licensing strategies may be incompatible with
worldwide agreements.

"For a small telecoms company, this kind of agreement
is only good if our suppliers have signed global
licences for the technologies"

The counsel for a France-based telecoms company agrees, and
adds that a global licence would make matters complicated for
his business.

"For a small telecoms company, this kind of agreement is
only good if our suppliers have signed global licences for the
technologies - but at the moment, they’re missing
patents and the SEP owners are choosing to sue us instead of
our suppliers."

He adds that some organisations, including patent trolls,
will force companies to sign global agreements on the basis of
patents that the company is unaware have been used in
off-the-shelf products.

The chief licensing officer at a Germany-based car
manufacturer also argues that when it comes to connected
technologies, such as driverless cars or the Internet of Things
(IoT), the decision will make life harder because supply chain
levels in the automotive industry are very different to those
telecommunications industry.

"We have three of four levels of suppliers in our chain,
which is not the case with smartphones where you have the sim
set and smartphone manufacturer and not much in between," he
says.

The understanding, he adds, is that exhaustion issues and
other rights mean the value of a licence needs to cover the
value of the entire supply chain. But that raises the question
of who in the supply chain should take a global licence and how
you value the licence for that entire supply chain.

"If you think about 5G when we will have larger spread of
tech, there will be many more modules with different
capabilities and need different patents and royalties will be
different," he says.

Furthermore, hundreds or thousands of SMEs will be producing
products for the IoT and few will have the technical expertise,
patent or IPR knowledge to really negotiate these licence
agreements - and it is going to be a nightmare if we do not
find a way of streamlining these licensing costs."

Clearly, the Unwired Planet decision has done a lot
to calm some company’s nerves when it comes to
licensing and tech prices – but there’s
still some way to go before all the kinks are ironed out and
companies have accepted the changes.